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Elasticity and a curve of the mutual offer.



If to use the exact form of a curve of the mutual offer it is possible to analyse it in the tideway of the general concept of elasticity. Unlike the general elasticity, elasticity of a curve of the mutual offer is equal to elasticity of demand for import along a curve and is defined as percentage change of quantity of import demand, delennoe on percentage change in the relative price of import (though there is also other definition). This definition is analogue of usual definition of price elasticity of demand. An exception


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Rice 8. Elasticity of demand for import lengthways offer curve is that it is defined on the basis of the relative prices instead of absolute monetary indicators.
Elasticity of import demand of a curve of the mutual offer is defined as distance OR, delennoe on distance OS. As a result in a part elasticity in ^R shows, that the curve is elastic, since OR> OS, i.e. OR/OS> 1; in a part offer curve it is not elastic, since OR/OS <1; in a part) the curve has individual elasticity, since OR/OS=1, t.o. offer curve it is usually represented consisting of 3 parts.
When the country is in an elastic part it means, that the given percent of changes in the relative prices for the imported goods will lead bolshemu to percentage change in quantity of acquired import.
When the country places in not elastic part it means, that the given percent of change in the relative prices for import will lead to smaller percentage change of quantity of import (fig. 8).
As export is analogue of the general expenses, the form offer curve can be treated the same as elasticity literally.
According to drawing 9, on plot OV (on a curve of the mutual offer) changes in terms of trade (for example, from (Rh/Ru) 1 to (Rh/Ru) 2) are accompanied by reduction of prices on U.Sootvetstvenno the country 1 aspires to consume more j demand on At is elastic, propensity to trade and export increases with 1 to 2. Directed upwards in this elastic part offer curve means, that reduction of prices on the import goods is accompanied by sale bolshego volume of export for acquisition bolshego import (therefore the country moves from the item And to the item).

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If the country is in not elastic part (fig. 9 see) it is presented by the part inclined back offer curve. We will assume, that the initial relative price (Rh/Ru) 4 crosses offer curve in t., and then increases to (Rh/Ru) 5 and it crosses offer curve in point G. It testifies that the relative prices for import have fallen, therefore the country aspires to acquire more import (increase with 4 to 5). But as demand neelastichen, the country is inclined
To expend it is less on acquisition At, that in a context offer curve means to reduce export which falls with 4 to 5.
At last, in case of individual elasticity in ^V - "watershed" between elastic and not elastic parts of a curve.
At very small change of the prices from ^V or at the big change of the prices if we have vertical offer curve, there will be no changes in quantity export 3. Accordingly there will be no changes in expenses for import.
Unusual line, characteristic offer curve, is the part of this curve inclined back. It is possible to give some explanations of the economic behaviour corresponding to these various indicators of elasticity. We will shortly present one such explanation that the best to present that occurs, if terms of trade are changed also the country moves along a curve of mutual demand. When price H grows concerning the price At, parity Rh/Ru and a line of terms of trade grows becomes more abruptly, consumers of the country 1 will aspire to change their purchases from goods H to the goods At since it becomes rather cheaper. So, as a result, the more H will be available for export, the less local consumers will wish to consume H.Etot's goods a substitution effect serves to make offer curve directed upwards since with other things being equal the increase in the prices on H associates with growth of quantity exported H.
When price H grows concerning the price At, manufacturers of the country 1 will aspire to make more H and less At, that the industrial effect is defined by possibility of higher yield in production H in comparison with U.Etot strengthens a substitution effect as soon as with increase in production H the increasing quantity H will be directed for export. Therefore the industrial effect, with other things being equal, also tends to do offer curve directed upwards when rather more heavy prices on H stimulate bolshy volume of export X.
At last, when the prices for goods H grow concerning the prices for the goods At, clearly, that the real earnings of the country 1 raise, since the goods, which it directs abroad (), give rather big profit whereas the goods purchased abroad, became rather cheaper. As a result of real earnings growth that became a consequence of change of the relative prices, the country 1 will aspire to acquire more both goods H, and d's goods, acquisition of goods H as a result of real earnings growth reduces number of goods H intended for export. Therefore the income effect or effect of terms of trade works in an opposite direction in comparison with a substitution effect and effect of production.
When the effect of replacement and production is together stronger, than the income effect, offer curve has the inclination directed upwards or a "normal" kind. However, if the income effect prevails over two others, offer curve will have a part with a worsening inclination or an inclination back. It is obvious, if the income effect simply corresponds to two other effects, offer curve will be vertical and will have individual elasticity. In the end, the form offer curve - a question empirical.
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Elasticity and a curve of the mutual offer.

  1. elasticity Application offer curve to terms of trade and trade volume.
    In the given question two situations when elastic offer curve it can be important for definition of influence on economic events are discussed. Fig. 10. Influence of economic growth on trade. imY Let's assume, that 1 - offer curve our country prior to the beginning of growth; OS, ' - as a result of growth. Initial terms of trade - THAT 1, a point of trading balance - E.Ekonomichesky growth
  2. Elasticity of the offer
    Elasticity of the offer is an indicator of relative change of quantity of the goods offered in the market according to relative change of a competitive price. The factor of elasticity of offer E s p represents the relation of change of the offer to the change which has caused it of the price: In drawing 8 three lines of the offer with different elasticity are shown. {foto12} Drawing 8 - Various
  3. Moving of curves of the mutual offer.
    Any curve of the mutual offer is "photo" of any moment of time. However with the course of time changes are possible. Let's assume, that after the reached balance consumers of the country 1 have changed tastes and have decided, that they could consume U.Poskolku's more goods it is the imported goods, it will be increased by demand for import, i.e. the country 1 will have more desires to trade and
  4. Chapter 3. Curves of the mutual offer as the tool of the analysis of foreign trade
    After theory Rikardo in the neoclassical theory of trade there is an assertion: the world prices as a result of trade are established at certain level. For example, Rikardo assumes, that 1 exchanges on 1 in the conditions of world trade, but does not investigate factors which define this price level. As well in neoclassical tradition it is given Rh/Ru, drawn on the diagramme of a curve of
  5. it is necessary to have always mutual dogovorenknost or to sign contracts that ljukdi were generous at a mutual exchange?
    to be generous means to give more than it is necessary. The present certificate of generosity is a donation without any conditions and expectations. Therefore I do not understand, for what to sign the contract if someone wishes to give something. if the person gives, but thus wishes to receive something in exchange in this case it is desirable that between the parties the accurate and concrete
  6. it is necessary to have always mutual dogovorenknost or to sign contracts that ljukdi were generous at a mutual exchange?
    to be generous means to give more than it is necessary. The present certificate of generosity is a donation without any conditions and expectations. Therefore I do not understand, for what to sign the contract if someone wishes to give something. if the person gives, but thus wishes to receive something in exchange in this case it is desirable that between the parties the accurate and concrete
  7. 7.4. Elasticity of a supply and demand
    Elasticity reflects dependence between demand and the prices; between the offer and the prices; between the prices and wages. It shows speed of reaction of demand or the offer on change of the prices. Elasticity of demand under the price or elasticity factor is measured as the relation of change of demand in percentage to price change in percentage. Where EA - factor of elasticity of demand
  8. Elasticity of a supply and demand
    Elasticity of demand Elasticity of demand defines change of a level of demand on separate kinds of the goods depending on the factors forming this demand (the prices for the goods, level of incomes, etc.). The various goods differ from each other on degree of reaction of a supply and demand on price change. We will consider three variants of a curve of demand (drawing 7). {foto10} And in Drawing
  9. 5.2. Concept of elasticity and its kinds
    Supply and demand depend on many factors. Their change attracts supply and demand respective alteration. The concept of elasticity also is connected with it. Elasticity - a measure of reaction of one economic variable on change other. In an economic theory consider elasticity of a supply and demand. Elasticity of demand for the goods - this percentage parity between change in the price or the
  10. the Factor of elasticity of demand
    shows, on how many percent the size of demand for the goods as a result, changes of its price for one percent varies. When decrease, the prices exactly is compensated by corresponding growth of demand, so that the general gain remains invariable - drawing 7 () it is possible to speak about individual elasticity of demand E d = 1. When price cut causes smaller growth of demand - drawing 7 (),
  11. the Chapter IV. Elasticity of requirements
    We saw, that the unique general law defining desire by an individual of any goods, consists that its desire, with other things being equal, is reduced with each increase in the offer of such goods. But the indicated reduction can be slow or fast. If it occurs slowly the price which the buyer gives for the goods, sharply will not decrease as a result of substantial growth of its offer, and small
  12. 8.6. Price elasticity of demand for the goods
    Demand for the goods differently reacts to changes of their prices, the prices of other goods and incomes of consumers. Price elasticity of demand for the goods shows, on how many items (protsenktov) the volume of demand for the goods is changed at change of its price (the price for other goods connected with the first goods; the income of the consumer of the given goods) on one item (proktsent).
  13. Elasticity of tourist demand.
    as it was already marked, tourist demand depends on the income of the consumer, duration of a compact free time, the prices for the goods and services and other factors. So, with introduction of regular paid holidays and increase of real wages consumption of the tourist goods and services increases. But the analysis cannot often be limited to an establishment only the general direction of
  14. there should not be a jealousy. The sexual love life constructed on mutual respect, on equality, on deep ideological affinity, on mutual trust, does not suppose lie, suspicion, jealousy.
    the Jealousy has in itself some rotten fig. Jealousy, on the one hand, result of mistrust to the favourite person, fear, that that will hide the truth, on the other hand, the jealousy is mistrust generation to itself (a self-humiliation condition): «I am bad so, that is not necessary to it (it), and it (it) can easily change to me». Further, in jealousy there is an element of own lie of the
  15. Degree of elasticity of demand
    (the factor of elasticity of demand depending on the price) E d p represents the relation of change of demand to the change which has caused it of the
  16. About what curve LM
    speaks Curve LM unites points in which the equilibrium condition in the market of money is carried out, i.e. the offer of money to equally demand for them. At each set volume of cumulative release curve LM shows, at what value of the interest rate balance in the market of money is reached. When the release volume increases, demand for money increases, and the interest rate raises, that the
  17. the Example of elasticity of demand
    Company "Кейтерпиллер" uses prospective cost to appoint the prices for the building technics. It could charge price on a tractor in 100 000 US dollars though the similar tractor of competitors would be estimated in 90 000 US dollars. And company "Кейтерпиллер" sales will be higher, than at the competitor! When the prospective client is interested at the dealer of company
  18. Function with constant elasticity of replacement
    (PEZ) gives internally nonlinear equation of regress: = (eK + (1-) L 1/. Smooth enough function near to some point it is possible to spread out abreast Taylor, having received thereby the linear form of model. So, at r ^ 0 function with constant elasticity of replacement coincides with function Kobba - Douglas. If to approach function PEZ in a point r = 0 decomposition abreast 8 Taylor to
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